FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst/File Photo
WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission said on Thursday it fined and settled charges against a Texas-based cryptocurrency firm and its founders for wrongfully issuing digital offerings and for using an unregistered online trading platform.
Wednesday’s settlement comes amid a broader SEC crackdown on token offerings in which it has settled nearly 40 charges against cryptocurrency start-ups in recent years, according to an agency database.
Bitqyck, and its founders Bruce Bise and Sam Menendez, gained $13 million from creating and selling its unregistered securities offerings to more than 13,000 investors.
The SEC alleged that the defendants told investors that one of its tokens, Bitqy, would provide fractional shares of the firm’s stock through a smart contract, while its other token, BitqyM, would provide investors interest in a crypto mining facility.
The firm did not actually own such a facility. It also wrongfully allowed investors to trade its Bitqy coins using an unregistered exchange, TradeBQ.
Neither Bitqyck nor its owners admitted or denied the SEC’s claims.
“Because digital investment assets represent a new and exciting technology, they can be very alluring, especially if investors believe they are getting in on the ground floor and will own part of the operations,” said David Peavler, head of the SEC’s Fort Worth Regional Office. “We allege that the defendants took advantage of investors’ appetite for these investments and fraudulently raised millions of dollars by lying about their business.”
All parties consented to the agency’s final judgments, agreed to return allegedly ill-gotten gains, including with interest, amounting to nearly $10 million, the agency said.
Bitqyck consented to pay $8,375,617. Bise and Menendez consented to each pay $890,254 and $850,022, respectively.
Reporting by Katanga Johnson; Editing by Michelle Price and Dan Grebler
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